Sebi bid to tweak float rules

Mumbai, June 4: Capital markets regulator Sebi is looking to make more shares available to the common public in initial public offers and at the same time increase the quota of anchor investors at the expense of other institutions.

This was disclosed by Sebi chairman U.K. Sinha at the 5th Capital Markets Summit organised by the CII here today.

As part of measures to boost primary market sentiment, Sebi plans to correct the anomaly in the minimum issue size of IPOs that will lead to the availability of more shares for small investors.

At present, all companies with a post-issue capital of below Rs 4,000 crore are required to offer at least a 25 per cent stake in the IPO, while companies with above Rs 4,000 crore post-issue capital are required to offer at least 10 per cent.

Because of this anomaly, there is a tendency on the part of corporates to show valuation of the company at Rs 4,000 crore plus.

“We are trying to remove this anomaly very shortly,” Sinha said.

Sinha said the regulator had received representations to bring down the retail portion in public offers but it would not accept the suggestion. However, Sebi is looking to increase the allocation to anchor investors.

Under the present norms, anchor investors are entitled to get shares up to 15 per cent of the issue. Sinha indicated that their share would be raised within the institutional category for whom 50 per cent of the issue was reserved.

Speaking to reporters on the sidelines of the conference, Sinha said state-run companies should adhere to the mandatory 25 per cent public shareholding norms that are applicable to private companies.

At present, private companies are compulsorily required to have at least 25 per cent public shareholding, while for government-owned companies the minimum threshold is only 10 per cent.

“We are talking to the government that the minimum public shareholding guidelines should not be dependent on who the owner is,” Sinha said, adding that regulations framed by Sebi should be neutral to ownership.

“Our objective is that the same set of rules should apply to all companies, including those owned majority by the government,” he said.

On the much awaited Real Estate Investment Trust guidelines, Sinha expressed hope that the government would announce tax breaks to make the instrument successful.